The futures traded higher on Tuesday after a solid start to the last trading week before the Christmas holiday. All the major indices finished higher, with the Nasdaq again leading, closing up 0.61% at 14,904.81. While the dovish Federal Reserve interest rate pivot remains the tailwind behind stocks, with some pricing in a rate cut as soon as March, some Fed governors pushed back on that early rate cut, saying nothing so far is set in stone.

Treasury yields were modestly higher across the curve, as profit-taking was the name of the game to start the week after a huge move lower in rates over the past three weeks. The 10-year benchmark closed the day at 3.94%, while the two-year short paper was last seen at 4.46%. Many across Wall Street are downplaying the potential for recession next year, but history tells us the ongoing inversion between the two government maturities suggests recession is in the future.

Brent and West Texas Intermediate crude both finished higher after BP halted shipments through the Red Sea following Houthi militants from Yemen attacks on cargo ships in the region. Brent closed trading at $78.16, up 2.10%, while WTI closed the session at 72.66, up 1.72%. Natural gas also closed higher at $2.51.

Gold continued marching higher as the February contract closed at $2040.20, up 0.22%. Analysts cited the potential for more weakness in the U.S. dollar and a growing sense that geo-political hot spots worldwide could get even hotter in 2024. Bitcoin has been on a rollercoaster over the past month, finishing Monday at $42,475, up a stunning 16% in December. (The biggest celebrity cryptocurrency losers.)

Notable upgrades for Tuesday, December 19, 2023

Adobe Inc. (NASDAQ: ADBE) from Equal Weight to Overweight at Barclays; no price target given.

Amazon.com Inc. (NASDAQ: AMZN) reiterated a Buy rating at Roth MKM with a price target increase from $165 to $180 per share.

Amgen Inc. (NASDAQ: AMGN) from Market Perform to Outperform at BMO Capital Markets with a price target increase from $286 to $326.

Sunrun Inc. (NASDAQ: RUN) from Neutral to Overweight at Piper Sandler with a price target increase from $15 to $31 per share.

Downgrades

PepsiCo Inc. (NASDAQ: PEP) from Overweight to Neutral at J.P. Morgan with a price target decrease from $185 to $176.

Plug Power Inc. (NASDAQ:  PLUG) from Neutral to Underweight at Piper Sandler with a price target decrease from $6.50 to $2.30.

Other

Chewy Inc. (NYSE: CHWY) initiated with a Buy rating at Jefferies and a price target of $27.

Netflix Inc. (NASDAQ: NFLX) reiterated an Overweight rating at Morgan Stanley with a price target increase from $475 to $550 per share.

Unity Software Inc. (NYSE: U) initiated with a Hold rating at HSBC Securities; no price target given.

Yum China Holdings Inc. (NYSE: YUMC) initiated with a Buy rating at Deutsche Bank and a price target of $58 per share.

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